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The Ides of March of Italian politics

The elections have revolutionized Italian politics and rebuffed Eurozone policy.

It is often difficult to interpret the election results when the system is not bipolar and the government is not formed as the direct outcome of the electoral result. But, while not providing a clear indication of a new government, the result of the Italian elections of March 4th has had a clear meaning that can be summarized in two points.

The first is the defeat of the two major parties: the Democratic party and Forza Italia - the two main protagonists on the Italian political scene of the last quarter of a century. The second is the clear victory of the Five Star Movement - founded about ten years ago by the comedian Beppe Grillo, who before the elections, handed over the leadership to the thirty-one year old Luigi Di Maio, former vice-President of the House of Representatives. An astonishing victory of the movement that obtained more votes than the sum of votes received by Renzi's PD and Berlusconi's Forza Italia, together.

It is also telling that the around 3 percent of the votes gained by the Five Star Movement equaled the electoral result obtained in Germany by Angela Merkel, re-elected for the fourth time as Chancellor. If the election result of March 4 does not revolutionize the Italian political landscape, one must ask what else needs to happen.

Luigi De Maio was appointed by the President of the Republic, Mattarella, to form the new government. He first expressed the preference for the Movement to make an agreement with the Democratic Party; but Matteo Renzi, its former secretary, as the last gesture of his appalling leadership, contemptuously rejected the proposal.

The alternative solution was the alliance between Five Star and the League, the rightwing party lead by Matteo Salvini, that, in the past, had been part of the Coalition with Berlusconi’s Forza Italia. In the end, the new coalition was based upon a program putting together the less controversial points of the two parties such as: public spending on investments to boost growth and employment; the cancellation of the Jobs Act and the revision of the pension reform of the past government, along with the institution of a form of citizen’s income for the unemployed – in short, a program that the establishment and media defined with scorn as "populist".

The intertwining of two crisesIndeed, the main problem for the new government will be the management of the relationship with the European Commission in the process of drafting and approving the budget law, that the new government has to send to Brussels in the autumn.In any case, the relationship with the Eurozone authorities, the European Commission and ECB, is going to be the Gordian knot of the new government.

It is a matter of fact that, ten years after the start of the global economic crisis, the eurozone has recorded the lowest growth and one of the highest unemployment among all market economies. It is no coincidence that Germany is the only exception given that, through the adoption of the single currency, it could profit from an undervalued exchange rate against the dollar and other major currencies - a level of exchange that would have been incompatible with the huge German trade surplus.

It is worth considering the close relationship between the euro crisis and the crisis of the center-left parties. All the most recent electoral tests have sanctioned the defeat of the social democratic parties, guardians of the neoliberal rules that govern the euro area.

The most telling case coming from France, the country that was the central player in the birth of the euro with Mitterand and Delors. It is not by chance that France has paid for the eurozone crisis with the astonishing disappearance of the old Socialist party from the political scene, which had been reduced to six percent of the vote, five years after the triumphant success of François Hollande in 2012 in the showdown with Nicholas Sarkozy.

And equally meaningful was the last electoral result of the German SPD which, under the leadership of Martin Schulz - ironically, former president of the European Parliament - recorded the worst post-war electoral outcome. Other examples can be given, such as the case in Austria, where the old Social Democratic party, founded at the time of Karl Marx, and has been almost continuously at the head, or a senior partner, of the governing coalitions - has been excluded by the government in favor of a right-wing coalition with radically eurosceptic positions.

In this context, the defeat in Italy of the Democratic Party, which lost more than half of the votes received in the 2014 European elections - dropping from 41 to around 18 percent - is, therefore, far from an isolated episode. It has to be placed in the general framework of the ruins of the left of the center governmental parties all over the European Union - with the only remarkable exception being the Labor Party led by Jeremy Corbyn.

Indeed, the simultaneous crisis of the left-wing government is not random: it is indeed the price paid to support the neoliberal policies that govern the eurozone: from the liquidation of the role of the state in the economy to the attack on welfare, as well as the attack on trade unions and collective bargaining. All circumstances that have contributed to swing the vote to the right-wing parties – a defeat that the center-left governments, instead of seeking to understand its causes, have ascribed to the generic and scapegoat category of populism.

The eurozone in questionThe relationship with the eurozone is, indeed, the central point of the political battle, dominated by the mystical belief in the policy of the eurozone. In this framework, Italy has been overshadowed by the fact that, being a victim of the perverse couple austerity-structural reforms, it has lived with during the past decade swinging between recession and stagnation.

And, without any sense of the grotesque, a stunted growth of 1.5 percent of GDP is deemed a success, even though still being the lowest in Europe, accompanied by an average 11 percent unemployment hitting 20 percent in some Southern regions, where youth unemployment is as high as 60 percent. An overall picture comparable only to that of Greece but, in many ways, worse, considering that the Mezzogiorno has almost double the population. But, notwithstanding this awful framework. according to the establishment, Italy should respect the Brussels’ misguided rules. In other words, the electoral result of March should be considered a random accident that can’t interfere with the sacred norms of the European policy.

Leaving the euro is not the actual issue of the new coalition. However, it is the moment to reject the eurozone "stupid" rules, according to a memorable definition by Romano Prodi, when he was president of the European Commission. One of these rules being the mandatory budget parity even in a context of permanent low growth and high unemployment - an arbitrary objective, which hinders any actual program of economic recovery and of social policy.

It is worth noting that the old Maastricht rules prescribe a limit of the budget deficit of three percent. After, with the Fiscal compact, formally expired in 2017 but kept alive, the commitment to achieve zero-deficit, as the central parameter of the neoliberal euro-policy, was strengthened, even though without being legitimated by entering into the European treaties. In any case, a commitment which France and Spain, to mention two major countries of the eurozone, have never complied with.

The difference between a balanced budget and a deficit set around the three percent old European paradigm amounts to about € 50 billion a year: a difference that can change the direction of (the) economic and social policy, freeing Italy from an up-to-date form of the old “bloodletting”.

In effect, the new coalition is moving in this direction, freeing up in the next three years around 100 billion euro to be committed to investment and social policies. As for the public debt, increased in Italy during the crisis also by virtue of austerity policies, it is a matter of fact that it can be reduced only pushing ahead the GDP – that is just the reverse of the deflationary policy imposed by the European authorities and, followed by the previous Italian governments..

Concluding, there is nothing mysterious about the reasons for the economic and social disaster that have brought Italy to its knees. Now, the opportunity exists after the democratic electoral revolt of March 4, to overthrow the bankruptcy strategy adopted by past center-left governments. An opportunity not to be missed.

Antonio Lettieri

Editor of Insight and President of CISS - Center for International Social Studies (Roma). He was National Secretary of CGIL; Member of ILO Governing Body,and Advisor of Labor Minister for European Affairs.(a.lettieri@insightweb.it)